OPPORTUNITY COST IN BEIJING!

I recently read an article in the Economist titled “A course by any other name.” I thought it would be a perfect example to show scarcity and opportunity cost.

To sum up the article, there has been an acute shortage of water in Beijing, thus being an important reason for limiting the cities growth. Water scarcity has been extremely evident this winter; their first snowfall was on February 9^th, the latest in 60 years. When it comes to golf courses in Beijing, they are not taking into consideration this water scarcity. This is becoming an issue. Golf is a highly preferred sport in Beijing, but a profusion of golf courses is eating up scarce farmland. In 2004, the government banned the building of new courses, but there was still course being built illegally. For all the fretting about this winters drought, Beijing shows little sign of renewing this ban on golf courses, and doing little to save the water. The drought has hit eight provinces that produce much of Chinas wheat. Crop-damage could send food prices much higher then they already are.

It is clear that China is dealing with the scarcity of water. They have the decision to ban new golf courses from being built to save the farmland, or close some golf courses to save the water.  As for the opportunity cost, Beijing is finding it difficult to give up the sport they love in order to preserve the water. If they decide to close down golf courses and not build any more, they would preserve more water, and potentially save their crops.


Maybe once the price of food goes up, Beijing will realize that they will need to take their golf-craze down a notch, because food and water is much more valuable!